Tuesday, July 22, 2008

The Moral of the Ben Franklin Story

"I wish to be useful even after my death, if possible," Ben Franklin wrote in his will, executed in 1790. Was he ever.

This early American giant -- statesman, inventor, scientist, philosopher -- was also among our earliest philanthropists. The 4,000 pounds sterling that he bequeathed to us is now worth millions. That enormous endowment growth was no happy accident; Franklin knew it would happen and planned for it. That's right; Franklin had a three hundred year vision.

While half of his bequest was set aside to make Pennsylvania's Schuylkill River navigable, Franklin directed that the remaining 2,000 be split between the cities of Boston and Philadelphia to be used for low-interest loans to young tradesmen -- for the first 100 years. Knowing that the endowment would grow over time and that society would change, Franklin stipulated that in the second 100 years, one-quarter should be used for loans while the rest could be used for public works in each city. That money was instrumental in the creation of the Franklin Institute in Philadelphia and the Franklin Institute of Boston, a technical school now known as the Benjamin Franklin Institute of Technology.

After two hundred years, Franklin wrote, the money was then to be divided again so that Boston and Philadelphia could keep one quarter of the total . The rest would go to their respective states and all restrictions on the use of the money would be lifted. Massachusetts continues to use the money to support the Franklin Institute of Technology. Pennsylvania, in 1990, divided their share between the Franklin Institute and the Community Foundations for Pennsylvania. The boards of those Foundations designated the money for uses that they knew Franklin cared about including firefighting and for scholarships.

Even in 1790, Franklin was only one of many Americans establishing bequests but there was no parallel or precedent for that kind of activity elsewhere or in world history. Many of those endowments were far larger than Franklin's but none that we know of were as well-structured to take advantage of changing circumstances over time.

Ben Franklin would be deeply disappointed if we didn't draw a moral from his story. In fact, there are several.

For philanthropists:

Imagine the impact you can have over time with even a modest bequest.

Bequeath your money so that it extends the meaning of your life (Franklin knew what it was like to struggle as a young tradesman) but don't put so many restrictions on the endowment that you lessen its impact. Think about reducing or changing restrictions over time.

Express your values in the creation of your bequests so that decision-makers of the future will have a clear sense of "donor intent."

For philanthropic organizations:

Tell this and other stories of enlightened bequests so your donors can grasp the power of a well-designed endowment.

Help donors write, even briefly, their own autobiography and encourage them to look for the themes and lessons that can be shared with others through philanthropy. Though Franklin never finished his autobiography, the lessons of his life comfort and inspire us today.

James Michael Langley

No comments: